New Development Charges Policy Passed By Council

The City of Cape Town’s Council last week, 29 May 2014, adopted the Development Charges Policy for Engineering Services for the City of Cape Town. This policy seeks to increase the standard of service provided to residents, business and industry, while ensuring that the pressure of future development can be channelled efficiently into the creation of a sustainable and thriving economy.

The City of Cape Town is one of the fastest growing metropolitan areas in the country. Pressure from new residential developments and the commercial, retail and industrial sectors is making the provision of world-class municipal services a challenging endeavour.

In order to support sustainable social and economic development in Cape Town, the City must ensure that sufficient infrastructure is in place to support the growth of our economy. However, the cost to the City of providing this infrastructure is high.

‘Financial modelling undertaken for the City’s Finance Directorate in 2009 showed that only around 5% of the capital cost of new economic infrastructure is currently recovered through development charges. This is an unviable situation that threatens the financial sustainability of the City and its ability to provide economic infrastructure in the future. Moreover, the historic effect of this under-recovery has led to underinvestment in infrastructure, which in turn hampers the City’s growth and development strategies,’ said the City’s Mayoral Committee Member: Transport for Cape Town, Councillor Brett Herron.

As a result, Council has passed a new policy: the Development Charges Policy for Engineering Services for the City of Cape Town. This policy aims to ensure the City’s financial sustainability by recovering the cost of increased loading on municipal services from the developer. All new developments or land use rights applications will either be subject to a fee calculated according to the conditions set out in the policy, or alternatively will be able to install bulk engineering services in lieu of development charges (subject to conditions).

In other words, this policy will ensure that those people who benefit most directly from the availability of the infrastructure required to supply water, sewerage, electricity, roads, stormwater drainage, municipal public transport and solid waste collection, contribute their fair share to the cost of that infrastructure.

‘This policy is aligned with the City’s strategic drive to create an opportunity city through establishing an economically enabling environment in which investment can grow and jobs can be created, while still being able to provide basic services to all residents in line with our commitment to being a safe city and caring city.

‘There are also environmental benefits that will flow from the implementation of this policy as inadequate infrastructure can have a negative impact on ecosystems and environmental quality,’ said Councillor Herron.

The new policy will come into effect on 1 July 2014, and will replace the existing interim policy. All interested parties can view the new policy on the City’s website at www.capetown.gov.za.